VISION SERVICE PLAN

About VISION SERVICE PLAN

With Vision Service Plan (VSP), the bottom line of the eye chart won't read U-O-W-E-B-I-G. The firm is a top managed eye care benefits provider that serves more than 72 million members in the US, Australia, Canada, Ireland, and the UK. Its VSP Vision Care programs offer coverage ranging from general plans (eye exams and eyewear) to laser vision correction procedures through a network of about 30,000 preferred doctors. Behind the managed care business is VSP's vertically-integrated eye care and eye wear business including frame manufacturing (Marchon Eyewear), optical labs, and optical practice management services. Founded in 1955 by a group of optometrists, VSP operates as a not-for-profit organization.

Other VSP businesses include Eyefinity, which provides doctors with practice management software; and VSP Optics, which delivers ophthalmic products to physicians and provides optical lab services through owned (VSPOne) and partnered facilities. The company's Eyes of Hope charity, launched in 2013, has invested more than $165 million in free eye care and eyewear for some 920,000 persons in need.

Geographic Reach

In addition to its California headquarters (in Rancho Cordova) and Eastern Operations Center in Ohio (Columbus), VSP has about 25 regional offices throughout the US. The VSPOne optical laboratories unit has 10 labs scattered across the US as well. VSP Global businesses operate in 100 countries around the globe.

Sales and Marketing

The company contracts with some 43,000 business clients, including government agencies and some 120 managed-care health plans, to offer employee benefits. It also markets eye care plans to individuals. VSP sells its vision plans through a network of about 16,000 national brokers -- including consultants, independent agents, general agents, and national brokerage firms -- as well as through its own direct sales force.

VSP has more than 63,000 access points, including a network of independent doctors and 4,600 retail chains.

Strategy

VSP aims to provide integrated eye care services to its members, reducing the need for external services. Its Marchon Eyewear and VSP Optics units also introduce new product lines to provide for consumers. In 2014 the group launched its Global Retail Development division to provide consumers with choices in eye care, eyewear, and shopping.

Additionally, the company maintains provider relations by offering a comprehensive array of support services, including procurement, logistics, and IT support, and it regularly seeks to add new providers to its network. In 2013 its Eyefinity division established a partnership with Modernizing Medicine, which offers cloud-based electronic health records, to provide fully integrated services to the optometry industry.

In 2013, VSP opened a VSPOne Optical Technology manufacturing center in St. Cloud, Minnesota; the following year it opened another in Baltimore.

Company Background

Though VSP continues to operate as a not-for-profit, the company's tax-exempt status was revoked in 2003 after an IRS audit said it failed to meet the criteria. VSP paid its tax bill but sued the government to regain the funds and the not-for-profit status it held for 40 years.

The US District Court in Sacramento ruled against VSP (and in 2009 the Supreme Court refused to hear the case), but the company has not given up and plans to apply for tax-exempt status with the IRS "as soon as possible." VSP claims it should have tax-exempt status because about 40% of the company's business is serving the poor through government programs, it spends 85% of its income on reimbursement payments, and because it has provided millions in free eye wear and eye care services through its community outreach programs.